Fiduciary Life Insurance Services

LIFE INSURANCE COMMISSION DISCLOSURES

We provide the following voluntary disclosures in the interests of building trust with our clients. The information provided is not exhaustive and is subject to unintended errors. If you have questions, concerns, or if you happen to observe a mistake, please let us know!

General Summary of Our Life Insurance Commissions

For company specific commission information and frequently asked questions, please scroll down the page.

1-5 Year Term

1-5 Year Term Commissions

~60% of first year premium

The general range of commissions paid to the retail broker for selling one to five year term policies is approximately 60% of the cumulative premiums you pay in the first year of your policy, give or take 15%. In most cases, there are no further “renewal” commissions paid in subsequent policy years.

10 Year Term

Ten (10) Year Term Commissions

~70% of first year premium

The general range of commissions paid to the retail broker for selling ten (10) year term policies is approximately 70% of the cumulative premiums you pay in the first year of your policy, give or take 15%. In most cases, there are no further “renewal” commissions paid in subsequent policy years.

15 Year Term

Fifteen (15) Year Term Commissions

~75%-80% of first year premium

The general range of commissions paid to the retail broker for selling fifteen (15) year term policies is approximately 75% of the cumulative premiums you pay in the first year of your policy, give or take 10%. In most cases, there are no further “renewal” commissions paid in subsequent policy years.

20 Year Term

Twenty (20) Year Term Commissions

~85% of first year premium

The general range of commissions paid to the retail broker for selling twenty (20) year term policies is approximately 85% of the cumulative premiums you pay in the first year of your policy, give or take 10%. In most cases, there are no further “renewal” commissions paid in subsequent policy years.

25 & 30 Year Term

Ten (10) Year Term Commissions

~95% of first year premium

The general range of commissions paid to the retail broker for selling the longest duration term policies, 25 and 30+ year term, is approximately 95% of the cumulative premiums you pay in the first year of your policy, give or take 10%. In most cases, there are no further “renewal” commissions paid in subsequent policy years.

“Permanent” Policies2

Permanent Policy Commissions

Broad range from 0%-110% of first year premium

Renewal Commissions

~5%

There is a very broad range of commissions paid out for the sale of so-called “permanent” life insurance contracts. With some companies, commissions on permanent (but not term) policies can be arbitrarily reduced at the discretion of the agent/broker in favor of better policy performance. Our commissions can thus range from 0%-110% or more of the cumulative premiums you might pay in the first year of your policy. Sometimes the initial “lump sum” commission is paid out in two or three installments over the first years of the policy. Unlike term policies, permanent life insurance policies frequently (but not always) pay “renewal” commissions in subsequent years of policy ownership. Depending on the type of policy and the company, “renewal” commissions typically range from 2-5% of the annual premium and can be paid for any number of subsequent years (from just two years to 20 years or more).

Note that the commission percentage of the premium paid graduates with longer duration policies. Policies with 25+ years often pay 95-100% of first year premiums, while policies with one or five year term durations pay only 50%! Couple this reality with the fact that longer duration policies also cost much more than shorter duration policies (many times 3X or more), and it is clear that agents are heavily incentivized to sell the longest duration policies available.

The only way that an agent can be compensated for remaining in touch with any of his/her customers is to sell new policies and/or replace old ones. This is not always in the best interests of the consumer.

With such a broad range of commission possibilities – even for term life insurance policies – candor and transparency is crucial. Our commitment is to ongoing and timely disclosure of all relevant facts pertaining to a transaction, which certainly includes how much money we stand to make from it.

Term Life Insurance Commissions by Company

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

All Term Durations

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

25 Year Term Insurance

30 Year Term Insurance

No Lapse Guarantee Universal Life

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

20 Year Term Insurance

30 Year Term Insurance

No Lapse Guarantee Universal Life

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

15 Year Term Insurance

20 Year Term Insurance

No Lapse Guarantee Universal Life

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

20 Year Term Insurance

30 Year Term Insurance

No Lapse Guarantee Universal Life

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

20 Year Term Insurance

25 Year Term Insurance

30 Year Term Insurance

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

10 Year Term Insurance

20 Year Term Insurance

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

20 Year Term Insurance

30 Year Term Insurance

No Lapse Guarantee Universal Life

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

At the present time, Guardian does not allow brokerage of its term life insurance products through independent channels. We do, however, still consider its pricing in all of our quotes and if it is the best opportunity for our clients, we will pursue referring you to a qualified Guardian agent.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

No Lapse Guarantee Universal Life

All Term and UL Products, John Hancock NY

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

No Lapse Guarantee Universal Life

All Term & GUL Products, Lincoln Financial NY

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

10 Year Term Insurance

40% of First Year Premium

20 Year Term Insurance

45% of First Year Premium

Renewal Commissions, All Term Products

2%

Mass Mutual offers a commission “over-ride” participation called an Expense Allowance Reimbursement (EAR). Qualifying for EAR is typically predicated on volume production (hitting certain sales results) with the company; however, it can be somewhat arbitrary, depending on what the General Agent (think: regional distributor/wholesaler) thinks is best to build relationships with independent brokers. Practically speaking, this means that . . .

The over-all (total) commission noted above can rise from 40-45% to as high as 71% of first year premium with Mass Mutual.

Also noteworthy: Mass Mutual is one of the very few life insurance companies that pays “renewal” commissions – commissions on premiums paid in years two and following. At 2% of the annual premium, the amount is small. But it is there.

30 Year Term Insurance

No Lapse Guarantee Universal Life

All Term & UL Products, Metlife NY

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

15 Year Term Insurance

20 Year Term Insurance

30 Year Term Insurance

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

20 Year Term Insurance

30 Year Term Insurance

No Lapse Guarantee Universal Life

At the present time, Northwestern Mutual does not allow brokerage of its products through independent channels. We do, however, still consider its pricing in all of our quotes and if it is the best opportunity for our clients, we will pursue referring you to a qualified Northwestern Mutual agent.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

10 Year Term Insurance

75% of First Year Premium

15 Year Term Insurance

75% of First Year Premium

20 Year Term Insurance

75% of First Year Premium

Ohio National has a graduated compensation schedule that increases the sales commission percentages with the volume production of the agent/broker. For example, once a broker has earned roughly $5,000 in commission at 75%, his/her next “tier” of production will be commissioned at 85%. At just over $30K in commissions, the compensation graduates again to 95%. And so forth on up to as high as 105%

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

One (1) Year Term Insurance

10 Year Term Insurance

65% of First Year Premium

15 Year Term Insurance

70% of First Year Premium

20 Year Term Insurance

85% of First Year Premium

30 Year Term Insurance

95% of First Year Premium

Pacific Life, like some other companies who do not distribute through independent Insurance Marketing Organizations (IMOs), offers a commission “over-ride” participation called an Expense Allowance Reimbursement (EAR). Qualifying for EAR is typically predicated on volume production (hitting certain sales results) with the company; however, it can be somewhat arbitrary, too. It often depends on what the General Agent (think: regional distributor/wholesaler) thinks is best to build relationships with independent brokers to encourage production. Practically speaking, this means that . . .

The over-all (total) commission can rise higher than what has been stated, here.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

10 Year Term Insurance

15 Year Term Insurance

20 Year Term Insurance

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

15 Year Term Insurance

20 Year Term Insurance

30 Year Term Insurance

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

25 Year Term Insurance

30 Year Term Insurance

All Term Life Products, Protective NY

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

30 Year Term Insurance

No Lapse Guarantee Universal Life

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

15 Year Term Insurance

20 Year Term Insurance

30 Year Term Insurance

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

At the present time, State Farm does not allow brokerage of its products through independent channels. We do, however, still consider its pricing in all of our quotes and if it is the best opportunity for our clients, we will pursue referring you to a qualified State Farm agent.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

20 Year Term Insurance

30 Year Term Insurance

No Lapse Guarantee Universal Life

At the present time, TIAA-CREF does not allow commissionable brokerage of its products through independent channels. We do, however, maintain an appointment under an independent, fee-only, advisor master contract with TIAA-CREF.

No Lapse Guarantee Universal Life

All Term & UL Products, Transamerica NY

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

20 Year Term Insurance

30 Year Term Insurance

No Lapse Guarantee Universal Life

At the present time, USAA does not allow brokerage of its products through independent channels. Nor does it even submit the pricing of its products for use in our quoting engines (or anyone else’s, for that matter). It has been our experience that USAA’s term life insurance products are generally not very competitively priced; thus, it would seem that they are to sell to its very large and highly captive audience of military and former military personnel through its captive, in-house employee-agents. We have pursued quoting arrangements with USAA, but have done so to no avail. So unless specifically requested, we generally do not consider USAA’s products in our quoting process.

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

20 Year Term Insurance

25 Year Term Insurance

30 Year Term Insurance

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

15 Year Term Insurance

20 Year Term Insurance

30 Year Term Insurance

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

30 Year Term Insurance

All Term Insurance, ING/Reliastar New York

We are not presently appointed to sell this company’s products; however, we do include this company in our market surveys and quote systems. If this company should at a subsequent time provide the most competitive solution for one of our clients, we would seek to become appointed at that time.

Frequently Asked Questions

No. Some companies won’t even allow independent brokerage of their products. In some cases where we are not allowed or not appointed to sell products, you will see that we have no commission details to disclose . . . because there is no commission relationship. In other cases and with the help of other life insurance professionals, we have provided commission details for companies with whom we are not presently appointed but either expect to become appointed in the near future, or with whom we have been appointed in the past.

Regardless of whether we are appointed to sell products from a company or not, we believe our fiduciary obligation to show pricing for the whole marketplace demands that we automatically obtain quotes from companies with whom we have no formal contractual relationship.

In cases where it is possible to become appointed to receive commissions from a carrier whose products offer the best value for a particular client, we will seek that appointment and obtain those commissions provided that doing so has no adverse impact on the product performance or our client’s best interests.

While there are some trends in compensation that apply to most companies, there are definitely some distinctions. For instance, some companies (such as Principal National) pay the same commission percentage for all of their term life insurance durations. Most, on the other hand, have higher pay-outs for longer term durations. In general, companies pay higher commissions for their most profitable products.

The most practical reason is just the sheer volume of information. Full commission summaries for each company with whom we are appointed range in length from 3-10 pages of fine print. A second and related reason is that only a small fraction of those voluminous disclosures applies to the business we customarily do for our clients. As such, we feel that publishing all of that material might give the erroneous impression that our range of product and transaction knowledge is larger than it actually is. Thirdly, we do this out of respect for the companies with whom we’re appointed to do business (or might become appointed to do business in the future). Most of the commission disclosure documents are provided to us from insurance carriers with the understanding (explicit or implicit) that we will not publish them abroad. This makes sense: each document reveals company-specific compensation methodologies in which each company has invested considerably with the hopes of giving themselves a competitive advantage in enticing agents to push their proprietary products. While we will not allow any company prohibitions against public dissemination of their compensation agreements to keep us from sharing all applicable commission details with our clients individually, we think that publishing those entire documents publicly – in full view for entire world to download – would be a gratuitous violation of good faith.

Lastly, there is this . . . which may seem counter-intuitive. As a fiduciary broker, there is a certain bliss of ignorance that accompanies not studying commission schedules in too much detail. We believe there’s a point at which obsessing too much over how we get paid can actually incline us to become more focused on the compensation than the client. Thus we become subject to the very influences and conflicts of interest both we and our clients hope to avoid.

Consider a simple example: many of the insurance companies entice agents to sell more of their proprietary products by providing rewards based on hitting certain sales production levels. Commonly these awards are all-expenses-paid trips to exotic destinations like the Carribean, or Hawaii, or even Europe. Now, we can’t speak for everyone else; but, we think those places are pretty cool. And yes, we’d like to visit them (even if it has to be in the company of a bunch of insurance sales people). So, we purposefully blind our eyes to those brochures and mail-outs when they come our way. We don’t study them to determine at which tiers we’ll qualify to go on those trips, or get whatever additional rewards they might offer. Why? Because we don’t want those inducements to unduly influence our recommendations or bias us towards one company above another. Dealing with the commission disparity between companies is hard enough without having hoola girls shaking their hips across the landscapes of our minds. So we purposefully blind our minds from those sorts of things. Upon request however, we can research that information as it pertains to any particular transaction under consideration for a client. But we’d prefer, for certain matters like these, to stay “in the dark.” Why introduce that influence when we can, through strategic and willful ignorance, keep it at arms length? Why not leave that extra mental bandwidth for focusing on the needs of our clients?

Staying ignorant to the detailed “bells and whistles” of company-specific compensation bonuses, tiers, or rewards is one small, easy way we manage the tension of being fully commissioned fiduciary brokers.

All that being said, sometimes willful ignorance doesn’t keep the “nonsense” out of our minds. Well, we have a simple, one-word plan for those instances. It’s called disclosure. If any of those incentives were to penetrate our awareness to where we found ourselves being biased to recommend one company’s products over another, we simply tell our clients about it. That puts the client in the know, which is only fair. What’s more, the process of bringing those thoughts into the light of mutual awareness is typically enough to shake off the unwanted bias, anyway.

Rarely. In general, we find that term life insurance is the best choice for the vast majority of our client’s needs. Some, mostly people in the business of making or selling life insurance, might regard that as an indicator of product bias. Perhaps it is. We tend to think it is merely a reflection of how exclusive the universe of cash-value life insurance buyers would be and should be, if those buyers really knew the whole story (and we’re not talking just Dave Ramsey’s story, or Suze Orman’s). It also bears mentioning that even if we were to recommend cash value products, we would begin looking at no-load (non-commissioned) products. This is one of many reasons why we have focused the commission disclosures above on term life insurance products.

That’s a very good question! And here’s a good article that answers it in more detail than you probably want to know, unless you are serious about buying any.

Practically speaking, No Lapse Guarantee Universal Life (NLG UL) is a type of permanent life insurance policy that allows someone to guarantee a death benefit up to a stated age (up to age 121) as long as a minimum, level premium is paid during all of those funding years. The guaranteed level premium is typically much lower than that which would be paid for a traditional whole life or universal life policy. The trade offs, in our experience are two-fold.

1) Loss of Liquidity. There is typically very little if any accessible cash-value during the ownership period of the policy. Aside from terminal illnesses, any liquidity from the policy during the lifetime of the insured would likely need to come from the secondary life insurance market, meaning you’d have to actually sell the policy (and all of its rights) to a third party investor who would gain a financial interest in the earliest possible death of the insured

In practice, we will only consider NLG UL for end-game estate planning situations where instant estate liquidity is needed (for example, to pay estate taxes on large illiquid assets). Despite whatever cash values a NLG UL policy might project in a policy illustration, and in spite of its name and technical construction, we think that NLG UL functions more like Term Insurance than permanent insurance. It’s just Term Until You Die or Term Until You’re XX Years Old . . . although no such nomenclature is available or allowed. Nevertheless, that’s how it looks and behaves.

In terms of pure out-of-pocket cash flow, NLG UL is commonly (but not always) the cheapest way to own a guaranteed death benefit that will not expire before the insured does.

The term “target premium” refers to the amount of premium upon which commissions for universal life insurance products, or other permanent life insurance products, are calculated. The term itself is fairly enigmatic. It does not, ironically, have any stated or unstated relationship to the amount of premiums needed to cause a life insurance policy to perform well or last a specific period of time. The amounts, in our experience, seem confusingly arbitrary at times. For instance, the target premium for one type of universal life insurance policy issued by a particular carrier can, at times, be 20-30% higher than another, different type of universal life insurance policy issued by the same company, on the same life, at the same risk classification. One can only deduce that the former type of policy represents more profit to the insurance company than the latter, so the company strategically sets a higher “target” commission for that policy in order to induce more sales of that particular type of policy.

From the perspective of producer compensation (commissions), one noteworthy aspect of “target” premiums is that commissions for unmet portions of target premiums will frequently “roll” forward into the second policy year, paying higher effective commissions to the sales professional in the second year of a policy. This is commonly referred to a policy having a “rolling target” premium. For example, let’s suppose that a 50 year old male is buying a $1M Guaranteed Universal Life policy. Let’s also suppose that the scheduled premium for this policy (sufficient to maintain its guarantees through age 121) are $8,000/year. The (arbitrarily assigned) target premium for such a policy might be $10,000/year. In this case, if the agent’s compensation is set at 75% of the target premium, with no “rolling target” for years two and beyond, the lump sum commission paid to the agent upon the placement (sale) of the policy (assuming an annual scheduled premium of $8,000, paid all up front) will be $6,000 ($8,000 X 75%) paid to the agent. And nothing more.

On the other hand, if the company in question pays commissions with a “rolling target,” then when the next year’s $8,000 premium is paid by the policy owner, an additional $1,500 ($2,000 X 75%) in commissions will be paid to the agent. The additional $2,000 of commissionable target premium is equal to the total initial target premium minus the premium upon which commissions were paid in the first policy year, or in this case $10,000 – $8,000 = 2,000.

In instances where target premiums are well in excess of scheduled premiums, the practice of using a “rolling target” helps deter agents from inducing customers to unnecessarily over-fund the first year’s policy premium.

At this time, with possibly a couple of exceptions, we do not receive (by either choice or lack of qualification) any additional benefits from insurance companies or Insurance Marketing Organizations (IMOs). One possible exception might be that we typically obtain our Errors & Omissions (professional liability) insurance through a discounted group arrangement made available by one of our carriers (in the past, Ohio National Life) or by one of the IMOs (more commonly known as GAs or General Agents) through which we place life insurance cases. We do not regard this as creating any unique incentive to do business with Ohio National or a particular IMO/GA because the discount is minimal and can typically be obtained through a variety of avenues. A second exception might be that we have the use of our IMO’s conference room as needed and some of their software/tools to analyze existing policies and/or design new policies. Furthermore, we are not aware of any production (sales volume) stipulations that accompany our use of either of these possible exceptions.

That said, opportunities do exist to receive additional, meaningful benefits that are based on sales volume production requirements and minimums. Such benefits include but are not limited to:

Trips to exotic destinations such as Cabo San Lucas, Hawaii, the Carribean, and even overseas to Europe or Asia.

Participation in a company’s group health insurance plans, which can amount to considerable cost savings for an otherwise self-employed person and his/her family.

Sales override bonuses from intermediary IMOs. A large number of insurance carriers may only be accessed through IMOs. In most cases, when a producer reaches a certain level of sales production, he/she will qualify to participate in the sales overrides paid by the insurance companies to the IMO.

Various technological offerings ranging from iPads to software freebies or discounts.

As previously stated, at the present time, we do not receive any of the above benefits.

Rarely but occasionally we are asked to assist a client seeking other kinds of life and health insurance such as long term care insurance, disability insurance, or individual health insurance. The commissions for those types of products typically range from 50%-60% of the first year premium with renewal commissions ranging from 5-15% of the annual premium. Give or take 10% or more.

Disability and Long Term Care Insurance Commissions

~50-60% of your first year policy premiums

Renewal Commissions for Disability and Long Term Care Insurance, Years 2+

~5-15% of annual premium

Individual Health Insurance Commissions, All Years

~5-20% of annual premium

In the event we assist a client with any of these purchases, we will disclose commissions promptly and fully in accordance with our written fiduciary obligation.

Mr. Burton is a current member of Medishare, a healthcare cost sharing non-profit in which he participates to meet his own family’s health insurance obligations. Like all other members of Medishare, Mr. Burton is eligible to receive a $100 Visa gift card from Medishare each time he refers a new enrolling member.

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